What are the factors that determine the price elasticity of demand for a commodity?

Explanation

Factors that determine the price elasticity of demand for a commodity are:

(i)The consumer's income:The higher the consumers income, the more inelastic his demand for goods and services will tend to be.

(ii) Substitutes:Commodities which have close substitutes tend to have a high price elasticity of demand while those that do not have close substitutes are likely to be inelastic.

(iii) Nature of commodity: Whether the commodity is a necessary or a luxury good will affect the elasticity of demand. Any good that is considered necessary will always be demanded even if the price is increased, i.e, the good is inelastic in demand. Luxury goods on the other hand are highly elastic in demand.

(iv) One's habit:When one forms a habit on the consumption of a commodity a change in the price of that commodity will not affect one's demand for such commodity.